Study On Effect Of Acquisitions Of Chinese Companies By Us Companies

With the globalization of the world, mergers and acquisitions (M&A) have become the main way of foreign direct investment (FDI). Since the 1990's, cross border M&A has been playing an important role in FDI. Especially after China's entry to the WTO, many US companies has merged and acquired Chinese enterprises and still more will do the same in the future. So it is meaningful to discuss the effect of the cross border M&A. Under these circumstances, whether M&A has brought value to the acquirer is necessary to talk about. The dissertation is just on this topic. With the data, which are obtained from Thomson ONE Banker, of the US companies acquiring Chinese enterprises during 1993 to 2001, the effect of M&A is analyzed by event methodology. The short-term changes of stock prices and long-term performance of the acquirer is the research focus.The first part is about the overview on the research status on cross border M&A. Firstly, the history and the status quo of M&A between US and China is introduced. Secondly, what the research is about is put forward. Finally, based on the research process "Theory -* Demonstration Study -* Conclusion & Solution", the research method and viewpoints are given.The second part is about the theory of M&A's effect. Firstly, the value increasing and value decreasing theory is introduced. Secondly, the theory in the acquisition of Chinese companies of US companies was analyzed. Finally, the assessment and opinion on the theories are given.The third part is an empirical test on the short-term share price response and the long-term share price performance on the transactions by the US companies during the sample period 1993 - 2001 through event methodology. The result of the study is concluded and the reasons are given in this part. In addition, some suggestions are given at the end of this part.